The last time I spoke to you was
in early April of this year, just a few days after I had
released the draft National Energy Efficiency and
Conservation strategy.

A week ago I released the final
version of the strategy. I believe it is a real milestone in
the development of the New Zealand energy sector and I want
to explain why today.

Before I get onto that, however, I
want to make a few quick points about some other recent
matters of relevance to this conference.

First is the
passage of the Electricity Reform Amendment Act in July.

This has opened the way for lines companies to invest
without limit in renewable energy projects, a change that
opens up new opportunities for your industry.

Lines
companies are by no means the only potential investors in
renewable energy. But there are situations where they will
have strong incentives to undertake or be partners in such
investment.

Lines companies are likely to have a focus on
distributed generation. Wind power will be one of their
options for that. No doubt you will want to make sure it is
an option on which they have plenty of information.

The second matter I want to mention briefly is the
nation's brush with a possible electricity shortage this
winter.

The low inflows to our hydro lakes this year have
highlighted the vulnerability of our electricity system to
the weather. We have had a sharp reminder of the risk
associated with our high level of hydro
generation.

Clearly there will be benefits in managing
this risk from diversification of our electricity sources.
It is clear also that building more gas-fired power stations
should not be our only source of diversification, given our
international obligations to reduce greenhouse gas
emissions. So non-hydro renewable generation will have to
increase as a proportion of new generation in coming
years.

Thirdly I must mention the rescue of the Kyoto
Protocol at the negotiations in Bonn in July.

Against
prevailing expectations that meeting resulted in agreement
on the rules needed to implement the protocol. The protocol
is now ratifiable and the Government has reaffirmed its
intention to ratify in September next year.

We are
working hard to develop policy that will ensure we meet our
obligations under the protocol in the most cost-effective
manner. The first major phase of public and sector group
consultation begins a little over a week from now. I am sure
your association will have a constructive contribution to
make.

My final brief point concerns a phenomenon that many
of you will be well aware of — the very large increase in
investment in wind energy in Europe and the USA. There are
also large new investments in solar energy.

Production
costs continue to fall for the emerging renewable energy
technologies. Over the last 20 years, for wind and
photovoltaic energy in Japan and the US, there has been
about a 20% decline in cost for each cumulative doubling of
production.

Internationally the energy supply environment
is beginning the fundamental and very significant change
away from fossil fuels towards renewables . This change is
gathering momentum as renewable energy technologies
mature.

That brings me to my main topic today, the
National Energy Efficiency and Conservation Strategy.

The
strategy embeds this Government’s commitment to a
progressive transition to renewable sources of energy. That
is why we have set a renewable energy target.

Before I go
into that more, I want to highlight some of the strategy's
other important elements.

It is New Zealand’s first energy
efficiency and conservation strategy – long overdue in my
opinion. I want to acknowledge the Green Party co-leader
Jeanette Fitzsimons’ contribution. It was her private
member’s Bill that led to the Act that requires the
strategy.

Beside progression to renewables, the other key
goal of the strategy is to improve energy efficiency and
energy conservation.

The strategy sets a target of at
least a 20% improvement in energy efficiency across the
economy by 2012. This would require double the current rate
of energy efficiency improvement, which should roughly halve
the rate of growth in our energy consumption.

We believe
this is a challenging but realistic target.

Indicative
estimates of the present value of the gains over the next 10
years, from energy savings alone, are $2.0 billion against
an investment of $1.1 billion. These are large numbers and
require substantial investment by energy users, government
and third party funders. But the payoff – both to the
individual and the nation – is clearly there.

Benefits
from reductions in carbon dioxide emissions are on top of
this. So are the benefits of the reduced private and public
health costs that are expected to flow from the strategy’s
programme to upgrade the energy efficiency of the pre-1977
housing stock.

Now to the part of the strategy that deals
with renewable energy. That is your main area of interest, I
know, and it has been the most difficult area of the whole
strategy to develop.

You will recall that the draft
strategy’s target for renewables was “to increase renewable
energy supply by a defined quantity by 2012”. By March, when
the draft strategy was released, we had not had time to do
enough background research to reach an informed view on what
that defined quantity should be.

Let me mention just a few
of the complexities.

One is that the scope for additional
renewable supply depends on the total demand for energy, and
there are considerable uncertainties about the level of
demand in the future.

Another will be the extent to which
we achieve the strategy’s energy efficiency target. The more
successful we are at improving energy efficiency, the less
demand there will be for additional renewables.

On the
cost side, renewable energy technologies are advancing very
rapidly, as I noted earlier. This creates uncertainties
about how much renewable supply will be cost-effective, and
when.

Another factor is that the benefits and costs of
renewable supply can vary considerably from site to site.
The variables include both the quality of the resource – the
wind, for example – and the environmental effects of using
it.

You are all very familiar with the difference in
environmental effects of the Tararua wind farm site compared
to the suggested Baring Head site. Similar considerations
and uncertainties will affect other new renewable generation
proposals, such as Meridian Energy’s proposed hydro scheme
on the lower Waitaki

Infrastructure considerations also
come into play. For networks such as the electricity system,
the costs of overcoming transmission constraints in a
specific area can create a premium for embedded renewable
generation that is in the right location. There can be
similar premiums for generation that improves the quality of
supply.

A further important issue for this government is
consideration of the business and economic development
benefits opportunities that might come from pushing growth
in renewable supply faster than it would otherwise
occur.

The final complexity I'll mention is the
relationship between renewables policy and climate change
policy.

Greater use of renewables as a result of the
strategy will contribute to our climate change response by
reducing carbon dioxide emissions. At the same time, the
market-based measures being considered as part of our
climate change response are likely to result in a greater
use of renewables. So renewables policy and climate change
policy have to be integrated and mutually consistent.

In
this area, to some extent, we will be learning by doing.
Nobody can be sure how much we might reduce the cost of
meeting our climate change obligations in 2008-12 by pushing
the development of the renewables sector in the shorter
term.

A renewables target, particularly if it is a
mandatory target, will have important implications for all
New Zealanders. If we go too high, the costs will outweigh
the benefits; if we go too low we risk short-changing
ourselves.

In the six months since the draft
strategy was released we have made a lot of progress on
these issues, but the work is not yet finished. So the
strategy has a quantified range as the target for
renewables: it is to increase renewable energy supply to
provide a further 25-55PJ of consumer energy by 2012. That's
an increase of 19 to 42 percent.

In developing its
renewables policy, the Government is looking across the
whole economy. We want to ensure that the effect of the
policy is to stimulate investment in those renewables that,
taking a longer term perspective, are most
cost-effective.

I expect this is likely to include
renewables for process heat, some solar water heating,
possibly some renewable transport fuels, and of course
renewables for electricity supply.

Take transport as an
example. It is a major energy user with insignificant
renewable energy usage, and it is growing fast. Ethanol has
been blended with gasoline in the US for 20 years, and
Australia sold 70 million litres of ethanol into the
transport fuel market last year.

While there is debate
about the current cost of biofuels for transport in New
Zealand, there is no doubt that there are opportunities for
innovators to bring these products to consumers. For example
the dairy industry has streams of by-product such as whey
that could be turned into ethanol for blending with petrol.

Another renewable energy opportunity exists through the
conversion of waste wood into energy. The strategy the
government is developing in partnership with the forestry
industry to increase domestic wood processing will create
opportunities to use more wood waste for industrial process
heat. In some cases that waste could generate electricity as
well.

There is clearly a future for wind energy in New
Zealand. Wind power is the world’s fastest growing energy
source and it is a significant global employer, with huge
potential.

In 1999, there were an estimated 86,000 jobs
worldwide in manufacturing and installing wind turbines and
that has doubled in the last two years. By 2020, the
Worldwatch Institute predicts that wind power may account
for 10 percent of all electricity generation and employ 1.7
million people.

I also believe that the use of solar
energy, particularly for domestic hot water heating, will
increase under the strategy. And I am aware that other
technologies, for example wave energy, are being carefully
looked at for niche applications.

The choice of policy
mechanisms to achieve the strategy’s target for renewables
needs to take proper account of the different needs of the
various renewable energy sectors. The strategy’s list of
possibilities includes both economy-wide and sector-specific
measures. As we work on refining the renewables target we
continue to evaluate these options.

The list of mechanisms
in the final strategy that could be used to achieve a
renewables target is almost as long as the list that was in
the draft strategy. But it is not the same list. The work
that has been done over the last six months has helped to
bring the most important issues into clearer focus.

That surprises me. As I've
mentioned, the 'how much' is 25-55 petajoules and the 'by
when' is 2012. It was a lazy comment and it didn't do
anything to advance the debate.

If you want to have some
influence, as an association, I'm afraid you'll have to
come up with some more reasoned and constructive criticism
than that.

From now until next February officials will be
working towards a provisional refined target or targets for
renewables. We will be looking to specify policy mechanisms
and to identify the preferred form of enabling legislation
if required.

There will be a report back to Cabinet on
these matters by mid-March next year. In the latter part of
March and April there will be a formal consultation process
with stakeholders and interested parties. And in July next
year Cabinet will consider the final package.

This work
programme is synchronised with the work programme on climate
change through to the middle of next year.

Following the
Government’s decisions on a final target and specific
mechanisms there may still be detailed design and
implementation issues to be worked through, again in
consultation with key stakeholders. There may be legislation
to pass.

Some measures may be ready for implementation
next year. But if a more complex manadatory mechanism is
chosen, the aim is to have it firmly in place and working by
November 2003.

I expect that many of you will want to
contribute to this process.

Feedback to the Ministry for
the Environment and EECA project team on the strategy’s
target range and mechanism options will be welcomed through
to December of this year.

There will be a formal
consultation process in March/April next year. Documentation
will be released beforehand to inform this process.

If you
wish to be involved in the consultation you are invited to
register your interest on the EECA website or by otherwise
making your interest known to the Ministry for the
Environment or EECA.

A vigorous, constructive New Zealand
Wind Energy Association will be a great help in achieving
the strategy’s target for renewable energy. So will
advocates for other renewables, so I am pleased to note that
the Bioenergy Association of New Zealand is being launched
tomorrow at this conference.

I am also pleased that moves
to form an umbrella organisation, Renewable Energy New
Zealand, are well advanced. Renewable energy is a sector
that requires a strong voice at this time. I look forward to
hearing it in the coming months.

In response to the challenges facing Scoop and the media industry we’ve instituted an Ethical Paywall to keep the news freely available to the public.
People who use Scoop for work need to be licensed through a ScoopPro subscription under this model, they also get access to exclusive news tools.

Military style semi-automatics and assault rifles will be banned in New Zealand under stronger new gun laws announced today, Prime Minister Jacinda Ardern says... Related parts used to convert these guns into MSSAs are also being banned, along with all high-capacity magazines.

“An amnesty will be put in place for weapons to be handed in, and Cabinet has directed officials to develop a buyback scheme...All semi-automatic weapons used during the terrorist attack on Friday 15 March will be banned." More>>

The latest statistics cover 110 agencies that collectively completed 18,106 official information requests between July and December 2018, a 16.4% increase on the 15,551 requests for the previous six months. More>>

ALSO:

A total of 64,400 hectares of conservation land in the Mokihinui River catchment on the West Coast north of Westport, including 15 km of riverbed, is being added to Kahurangi National Park. “Adding this area, roughly half the size of Auckland City, to Kahurangi is the largest addition of land to an existing national park in New Zealand’s history,” Eugenie Sage said. More>>